Juggling Dynamite

Today capital flows are continuing to dump risk and pool in the usual ‘safe haven’ suspects.  Gold bullion is through $1300.  The US dollar, Yen and Swiss Franc are all strongly bid, with the Yen funded carry trade in swift reversal.  The Yen has strengthened to $104.20/USD today, far stronger than the $110.98 area it peaked at in the global market sell-off into February of this year.  Oil, copper and commodity-currencies are tanking.  Other than cash safe-haven currencies, treasuries are in high demand once more.

This chart of the US 10-year Treasury yield tells the tale of central bankers who are running on empty and losing the confidence battle amid political upheaval far and wide.  Today breaking below 1.56%, the 10-year yield has now broke below the prior lows of February 2016, 2015 and 2013.  But with German, Swiss and Japanese 10-year treasuries now all with negative yields, a global flood of yield-starved cash may well push North American yields lower still.  The next test, as circled in the far left yellow oval below, is the 1.39 all time low reached in 2012.

As the long always, sell side, perpetually insists that the economy is ‘getting better’, ‘job growth is good’, ‘profits should improve’ and ‘central banks still have options’, capital is stampeding out of risk markets all around them.

The catalyst is not ‘Brexit’ or Trump, irrational fears, or any one of the dozens of recessionary looking economic indicators worldwide.  The catalyst is the growing awareness that central banks have not only failed to steward global inflation and job growth–but their relentless credit ‘stimulants’ have been instrumental in decimating them.

Economic contraction and the coming bear market have been well and surely earned.  Rather than deny the power of market cycles, it is wise to take cover and allow mean reversion to run its value-restoring course, however long it takes.  The upside for those with discipline and foresight, promises to be well worth the wait.

The advent of big box stores like Wallmart over the past 30 years, served to shutter local competitors and replace those business owners, craftspeople and workers (who spent, hired and invested in the community) with slave-wage manufacturing jobs in developing countries and minimum wage retail positions at home. As these publicly traded conglomerates “scaled up”, local economies, wages and social-stability scaled down. Luckily, a trend this extreme and economically self-defeating, could never continue forever and has sown the seeds of its own demise.

Progressive business models today are focused on moving back from global distribution conglomerates to those that help to increase efficiency at the individual household and community level and re-circulate savings and spending back through local and national economies rather than siphoning cash away to external investors that live and spend elsewhere.

Scaling up household and local strength, will mean reducing the choke-hold of large multi-national corporations and institutions. We should expect the status quo to warn of economic disaster, “uncertainty” and “instability’ as this evolution proceeds. They mean, for themselves. The real world: working people and small business owners, live with risk and uncertainty every day. We are used to it. It’s the executives, politicians and so called ‘investors’ who have grown fat on globalization and the extraction of passive profits, that have been under the delusion of ‘certainty’ the past decade. They are the ones who have the most to lose now as more equitable, value-added business models evolve.

Caveat Emptor:  Stone is a self-described Libertarian now working on the Trump stump.  But his decades of personal experience in political circles, research and writing, dates long before this election, and his assertions are well documented and footnoted in his books.  Even if a portion of these stories are accurate…you can’t make this stuff up. Honestly.  Is it that no one with integrity can be elected in politics?  Where does that leave us?

Roger Stone brings us up close and personal to the levers of power. He’s been intimately involved with all the major political players for nearly half a century. He’s written four books about it. His latest two, The Clinton War on Women & Jeb! and the Bush Crime Family, detail a clear pattern of what Roger calls Elite Deviance. You know it well, the belief by the rich and powerful that the laws don’t apply to them.

Here is a direct audio link to Stone’s interview with Kerry Lutz.